If the company issues a $100,000, 10%, 10-year bond, that pays interest semi-annually when market interest rate is 12%, the bond would sell at an amount O less than face value. O that cannot be determined based on the information given. O equal to face value. O greater than face value.
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- On the first day of its fiscal year, Jacinto Company issued $14,700,000 of five-year, 8% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Jacinto Company receiving cash of $14,118,450. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. 3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. If an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. Cash 1. 14,118,450 Discount on Bonds Payable 581,550 Bonds Payable 14,700,000 2. Interest Expense 529,845 Discount on Bonds Payable v 581,155 Cash V 588,000 Interest Expense 3. 529,845 Discount on Bonds Payable 58,155 Cash 588,000If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount ☐ a. equal to the face value b. greater than face value c. that cannot be determined d. less than face value2. DEF Company will issue $8,000,000 in 10%, 10-year bonds when the market rate of interest is 7%. Interest is paid semiannually. Required: a. Will this interest structure result in a Premium for DEF company or a Discount? b. How much cash will be received from the issuance of the bond? c. How much will the semi-annual interest payment be on the bond?
- A company issues a bond with a par value of $500,000 and a contract rate of 5%. Explain the concept of market rate. Why would a company issue a bond at a discount or a premium? How is bond price impacted? If the bond is issued at a discount or a premium, does it impact the interest or principal paid? Why or why not? (Answer in 5-10 sentences)A bond issue with a face amount of $507,000 bears interest at the rate of 10%. The current market rate of interest is also 10%. These bonds will sell at a price that is: More than $507,000. Equal to $507,000. The answer cannot be determined from the information provided. Less than $507,000.If a Company plans to issue $1,000,000 of 6% bonds at a time when the market rate for similar bonds is 3%, the bonds are to sell at: A: The face amount B: Premium C: Discount D: None of the above
- a. An 8 ½%, 25-year, $1,000 bond is presently selling at a yield-to-maturity (YTM) of 9 4%. Assuming annual interest payments, what should you pay for the bond? b. What should you pay if interest is paid semiannually? c. Instead of a 25-year bond, they decide to issue 15-year bonds with annual payments. What should you pay for this bond if the YTM is 9 4%? Explain the differences in prices changes for (3a) and (3c) in terms of maturity. d. You buy an 8%, 15-year, $1,000 bond that pays interest annually when it is selling with a YTM of 7%. Immediately after you buy the bond, the YTM increases to 9%. What was the percentage change in the price of the bond? A bond has a market price that exceeds its face value. What type of bond is this? Describe the relationship between the coupon rate and the YTM. е.What is the present value of a $500,000 12-year Bond with annual interest payments of $40,000 (contract rate of 8%) assuming an effective rate of 10%? You must show work to receive credit for this problem. Paragraph Lato (Recom... v 19px... ✓ T BI U A V => DC + v ...If the market rate of interest is 5%, a $100,000, 6%, 30-year bond that pays interest annually would sell at an amount less than face value (discount). equal to face value. greater than face value (premium). none of the above.
- A bond has a face value of $1,000,000 and matures on 12/31/2050. Which statement is FALSE? O The maturity value is $1,000,000 O The bond must have initially sold for $1,000,000. O The par value is $1,000,000. O The company must pay its creditors $1,000,000 on 12/31/2050.Reynolds Co. ISsued $87 million face amount of 11.00% bonds when market interest rates were 10.90% for bonds of similar risk and other characteristics. Required: 0. How much interest will be paid annually on these bonds? (Enter your answer In dollars, not milons of dollars.) b. Were the bonds issued at a premium or discount? c. Will the annual Interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? a Annual interest payment b. Bonds issued C. Annual interest expense will beA bond issue with a face amount of $497.000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is: Multiple Choice Less than $497,000. More than $497,000. Equal to $497,00. The answer cannot be determined from the information provided.